A state-contingent production approach to principal-agent problems with an application to point-source pollution control

Two basic representations of principal-agent relationships, the 'state-space' and 'parameterized distribution' formulations, have emerged. Although the state-space formulation appears more natural, analytical studies using this formulation have had limited success. This paper develops a state-space formulation of the moral-hazard problem using a general representation of production under uncertainty. A closed-form solution for the agency-cost problem is derived. Comparative-static results are deduced. Next we solve the principal's problem of selecting the optimal output given the agency-cost function. The analysis is applied to the problem of point-source pollution control. (C) 1998 Published by Elsevier Science S.A. All rights reserved.

Economic and environmental impacts of pollution control in a system of environment and economic interdependence

The importance of the rate of change of the pollution stock in determining the damage to the environment has been an issue of increasing concern in the literature. This paper uses a three-sector (economy, population and environment), non-linear, discrete time, calibrated model to examine pollution control. The model explicitly links economic growth to the health of the environment. The stock of natural resources is affected by the rate of pollution flows, through their impact on the regenerative capacity of the natural resource stock. This can shed useful insights into pollution control strategies, particularly in developing countries where environmental resources are crucial for production in many sectors of the economy. Simulation exercises suggested that, under plausible assumptions, it is possible to reverse undesirable transient dynamics through pollution control expenditure, but this is dependent upon the strategies used for control. The best strategy is to spend money fostering the development of production technologies that reduce pollution rather than spending money dealing with the effects of the pollution flow into the environment. (C) 2001 Elsevier Science Ltd. All rights reserved.

Empirical evidence showing the relationships between three approaches for pollution control

Willingness to pay models have shown the theoretical relationships between the contingent valuation, cost of illness and the avertive behaviour approaches. In this paper, field survey data are used to compare the relationships between these three approaches and to demonstrate that contingent valuation bids exceed the sum of cost of illness and the avertive behaviour approach estimates. The estimates provide a validity check for CV bids and further support the claim that contingent valuation studies are theoretically consistent.

Spatial, temporal, and human dimensions of air pollution in Brisbane

Arriving in Brisbane some six years ago, I could not help being impressed by what may be prosaically described as its atmospheric amenity resources. Perhaps this in part was due to my recent experiences in major urban centres in North America, but since that time, that sparkling quality and the blue skies seem to have progressively diminished. Unfortunately, there is also objective evidence available to suggest that this apparent deterioration is not merely the result of habituation of the senses. Air pollution data for the city show trends of increasing concentrations of those very substances that have destroyed the attractiveness of major population centres elsewhere, with climates initially as salubrious. Indeed, present figures indicate that photochemical smog in unacceptably high concentrations is rapidly becoming endemic also over Brisbane. These regrettable developments should come as no surprise. The society at large has not been inclined to respond purposefully to warnings of impending environmental problems, despite the experiences and publicity from overseas and even from other cities within Australia. Nor, up to the present, have certain politicians and government officials displayed stances beyond those necessary for the maintenance of a decorum of concern. At this stage, there still exists the possibility for meaningful government action without the embarrassment of losing political favour with the electorate. To the contrary, there is every chance that such action may be turned to advantage with increased public enlightenment. It would be more than a pity to miss perhaps the final remaining opportunity: Queensland is one of the few remaining places in the world with sufficient resources to permit both rational development and high environmental quality. The choice appears to be one of making a relatively minor investment now for a large financial and social gain the near future, or, permitting Brisbane to degenerate gradually into just another stagnated Los Angeles or Sydney. The present monograph attempts to introduce the problem by reviewing the available research on air quality in the Brisbane area. It also tries to elucidate some seemingly obvious, but so far unapplied management approaches. By necessity, such a broad treatment needs to make inroads into extensive ranges of subject areas, including political and legal practices to public perceptions, scientific measurement and statistical analysis to dynamics of air flow. Clearly, it does not pretend to be definitive in any of these fields, but it does try to emphasize those adjustable facets of the human use system of natural resources, too often neglected in favour of air pollution control technology. The crossing of disciplinary boundaries, however, needs no apology: air quality problems are ubiquitous, touching upon space, time and human interaction.

Issues related to the wearing of fall-arrest harnesses in the construction industry

Work-related falls continues to be one of the leading causes of fatalities in the Australian construction industry, and the failure to use fall protection equipment, such as fall-arrest harnesses and arresting devices, has been found to be a contributing factor. In an attempt to gain an understanding of the issues surrounding the use of fallarrest harness systems by construction workers a study involving semi-structured interviews of 15 male construction workers was carried out at three construction sites. The majority of interviewees commented that there was discomfort in wearing a fall-arrest harness; that there were a number of problems when anchored via an arresting device; and that using a fall-arrest system reduced productivity. Most of the interviewees considered that they needed safety precautions against falls, and they expressed the view that workers’ attitudes towards safety depended critically upon their supervisors’ attitude towards safety. It was also found that workers were not trained in rescue procedures. Interviewees expressed concern that retrieval of a suspended worker may not be carried out in time to prevent the onset of suspension trauma. A number of issues were identified which require further research, such as, investigation into suspension trauma, harness and arresting device design, training provided to workers, and the provision for rescues.